Requiem for the state bus

Kill. The ultimate scalpel operation as the final sign of life ebbs away. Let it die, rather than drag a colossal waste. We were probably expecting this to happen. Not just to this state-owned bus transit undertaking in India’s largest state -- Madhya Pradesh -- but to numerous other undertakings that have state governments as their bosses. Bankruptcy at monthly losses totaling Rs 50 million, indignity of unpaid salaries for 11,500 staff members that run only 1500 buses forced this euthanasia in Madhya Pradesh. With this came the quiet reminder of a similar case two years back, when the Manipur State Transport Corporation shut down operations.

There is a depressing pattern to all this. The crisis engulfs both state-run and city transport undertakings in many states in India.

The scale of the decay and the rot does not shock. This is routine in any government-run institution. But at a time when the interest is slowly growing in finding transportation solutions to the congestion and pollution mayhem, institutional failure of this magnitude spells disaster in cities. This fatalist mindset to surrender without charting solutions is criminal. Not a single state government has been able to develop a blueprint to craft institutional changes for coordinated and integrated public transport services in cities. Cities face either a total collapse of public transport, or chaos with private bus operators running amuck without controls.

The chances of recovery for the state-owned city transit agencies look grim. A quick review foretells a crisis in these loss-making operations. The city undertakings are plunged into a vortex: as revenues are down, fleet size or service enhancement is impossible, and in this situation the losses continue to mount. The losses for Mumbai city undertaking have increased by a whopping 255 per cent during the decade 1990-2001. Chennai also saw an increase in losses by 206 per cent in the same period.

Pressured into maintaining low fares, subsidies and services in unprofitable routes, most state-owned city undertakings cannot recover operational cost or reach anywhere close to breakeven point. The overall balance sheet of the Delhi Transport Corporation (DTC) for instance, points to the need for an urgent re-engineering of the financial situation.

Enormous labour cost imbalances the balance sheet. If by convention, experts consider four persons per bus as efficient, the DTC employs nearly 40,000 people to manage a fleet of 3,398 buses – a staff ratio of eleven persons per bus. The salary cost of DTC eats up all its earnings -- an astounding 91 per cent of its total earnings.

The DTC is still afloat largely because the government affords it immunity from financial shocks. An increasing dependence on Ways and Means loans from the government on a month-to-month basis to cover the working deficit will never be adequate to square up the monthly working loss. It will be difficult to sustain the Corporation in this fashion or any other for long as the emerging financial fissures make clear.

Why are we concerned? For the simple reason that this inefficiency is translating into a mobility crisis -- plunging passenger volumes when demand for travel is rising. Defying all reasons, the bus occupancy in all major city bus undertakings has fallen dramatically. In Mumbai and Kolkata, the decline has been most dramatic -- a quarter drop from 1990 levels. In Pune the load factor has come down from 64 per cent in 1990 to 45 per cent in 2001. This means that nearly half of the Pune Corporation’s buses are running empty. Fleet utilisation in some metros like Kolkata is as dismal as 66.50 per cent.

If the state-owned transit agencies are expected to provide the bulk of the urban services in bigger cities, the poor financial performance cast doubts on their viability to provide adequate and quality public transport services. And that worries. More people will desert buses and go zoom on cars and two-wheelers.

The government has not planned solutions. It despairs and gives up. Says privatise. In fact, two key policy documents - the Tenth Plan document and the draft national Urban Transport Policy - make the case for greater private participation. Such a cliché when on an all-India basis, nearly 90 per cent of the buses are already in private hands. Only in some cities do the state-owned undertakings have a larger presence – 33 per cent of bus ownership in Delhi for instance.

Already ad hoc privatisation, with route licenses being issued in varying numbers to small bus operators, is creating chaos in traffic management. The current woes stem from the enhanced but unplanned private sector participation. Mismanaged and unhealthy competition between the state-owned and private bus agencies has sharpened. Reckless competition is making roads unsafe.

Though private sector investment has begun, there is no strategic planning or set timetables to create a dramatic turnaround. With a greater influx of private operators, it is essential to put a regulatory framework in place. But as of now there are no signs of individual operators being consolidated into cooperatives or transit companies to make them more amenable to regulations. If we wait longer, there could be resistance from these unruly bus operators to regulatory demands to maintain the quality of urban bus services. Unregulated autonomy may lead to unfair practices. The negotiating power of the regulator will only get weaker.

While the Urban Transport Policy has failed to give any guideline on this matter, the Tenth Plan document leaves it to the state governments to issue guidelines on privatisation. It only arbitrarily suggests a minimum viable size of the fleet – preferably 50, and sets criteria for technical and financial soundness of the operators. That’s all. No details on possible models. City governments remain clueless about regulating bus transport -- network structure, service quality criteria, pricing and fare structure, safeguards for the poor and use of regulatory instruments to manage privatisation. They are not even interested. Such a policy vacuum!

For the government, privatisation is a cop out. Close shops, and shed responsibility. Look away, even as the state-owned transit agencies dodder at sub-optimal efficiency – trying desperately to maintain hold. Just as private operators desperately require reorganisation, state-run transit agencies can only survive with reforms. But city governments show no signs of revving up to this task.

Centre for Science and Environment is organizing a two day conference for experience sharing between the developing nations of Asia and Africa to be held on April 9th and 10th, 2015 in New Delhi, India in India Habitat Centre, Lodhi Road, New Delhi.